Bitcoin falls as hackers hit South Korean exchange Coinrail

SEOUL (Reuters) – South Korean cryptocurrency exchange Coinrail announced it was hacked over the weekend, causing Bitcoin to fall sharply as concerns about the security of virtual wallets re-emerge as global policymakers struggled to trade digital ones Regulate assets.

FILE PHOTO: A small toy figure can be seen on representations of the virtual currency Bitcoin in this illustration image dated December 26, 2017. REUTERS / Dado Ruvic / Illustration

In a statement on its website on Monday, Coinrail said its system was hit by “cyber intrusion” on Sunday, which resulted in a loss of about 30 percent of the coins traded on the exchange. The value has not been quantified, but an unrelated report by local Yonhap news agency estimated that approximately 40 billion won ($ 37.28 million) of virtual coins were stolen.

The raid on Coinrail, a relatively small South Korean cryptocurrency exchange, dropped the price of Bitcoin to a two-month low as it again highlighted the security risks and weak regulation of global cryptocurrency markets.

South Korea is one of the world’s largest cryptocurrency trading centers and is home to one of the busiest virtual coin exchanges, Bithumb.

On the Luxembourg-based Bitstamp Bitcoin BTC = BTSP The last trade was at $ 6,790.88, a sharp 10.8 percent decline from Friday after falling around 65 percent since its peak in mid-December 2017.

Investors and regulators were shaken earlier this year after Japan’s cryptocurrency exchange Coincheck was hacked in a high-profile theft of digital currency worth over half a billion dollars.

In 2014, Tokyo-based Mt. Gox, which once handled 80 percent of the world’s Bitcoin business, filed for bankruptcy after losing around half a billion dollars in Bitcoins. More recently, last December, the South Korean cryptocurrency exchange Youbit was shut down and filed for bankruptcy after being hacked twice.

WARNING

Global policymakers have warned investors to be cautious when trading the digital currency as it lacks comprehensive oversight of regulators.

“Coinrail is not a member of the group that promotes self-regulation to increase safety. It’s a small player in the market and I can see how such small exchanges with lower security standards can be more at risk, “said Kim Jin-Hwa, representative at the Korea Blockchain Industry Association.

In South Korea, 14 major local cryptocurrency exchanges took action this January to better protect users, including restrictions on creating more than one account.

According to Coinrail, the remaining 70 percent of the virtual coins are now secured in its “cold wallet” that works on platforms that are not directly connected to the internet. It was not immediately clear whether the lost coins were being kept in the more insecure “hot wallet”.

The Korea Internet & Security Agency, which is currently conducting the investigation with the police, said only four of the country’s largest exchanges are subject to the Information Security Management System (ISMS) requirement.

The ISMS is a system that certifies the protection of personal data in companies with an average daily visitor share of over 1 million.

“Coinrail has not been certified with the ISMS as of June this year as it is not mandatory (for the organization),” the local regulator said in a statement.

Coinrail confirmed in its statement that the exchange is fully cooperating with a police investigation into the hacking and that trading has been suspended for the time being. The company was not immediately available for further comment.

Coinrail was the 98th largest cryptocurrency exchange, trading more than 50 different virtual coins, according to Coinmarketcap.com

Reporting by Cynthia Kim; Additional coverage from Choonsik Yoo; Editing by Shri Navaratnam

Comments are closed.